Salt Lake County v. Metro West Ready Mix, Inc.

• Decision Date: 23 March 2004
• Docket Number: No. 20020701.,20020701.
• Citation: 2004 UT 23,89 P.3d 155
• Parties: SALT LAKE COUNTY, Plaintiff and Appellant, v. METRO WEST READY MIX, INC., a Utah corporation, and Monterra Rock Products, Inc., a Utah corporation, Defendants and Appellees.
• Court: Utah Supreme Court

89 P.3d 155

2004 UT 23

SALT LAKE COUNTY, Plaintiff and Appellant, v. METRO WEST READY MIX, INC., a Utah corporation, and Monterra Rock Products, Inc., a Utah corporation, Defendants and Appellees.

No. 20020701.

Supreme Court of Utah.

March 23, 2004.

David E. Yocom, Don H. Hansen, Salt Lake City, for plaintiff.

Mark R. Clements, Mark H. Richards, Salt Lake City, for defendants.

DURRANT, Associate Chief Justice:

¶ 1 In this case we address whether a purchaser who obtains title to property through a wild deed can be a bona fide purchaser under Utah's Recording Statute.

¶ 2 The dispute at issue is between Salt Lake County (the "County") and Metro West Ready Mix, Inc. ("Metro West") over the ownership of Parcel G, a fifteen-acre piece of property located in Utah County near the border between Utah and Salt Lake Counties (the "Property"). The County received legal title to the Property on December 4, 1878; however, it failed to record its deed in the Utah County Recorder's Office until June 17, 1998.

¶ 3 Nine years before the County recorded its deed in Utah County, Metro West purchased the Property from the Property's purported owners. Metro West did so even though a record title search revealed that the owners had no record title to the Property. Metro West subsequently recorded its quitclaim deed in the Utah County Recorder's Office on April 14, 1989.

¶ 4 After learning of Metro West's claimed ownership, the County filed suit in 1999 to quiet title to the Property. The trial court found that Metro West was a bona fide purchaser under Utah's Recording Statute and granted summary judgment in favor of Metro West. The County appealed, and the court of appeals affirmed based on its newly-enunciated "apparent title rule." We reverse.

FACTUAL BACKGROUND¹

¶ 5 The United States Government conveyed the Property by land patent to William Turner in 1878. The Property is located in Utah County, with its northern border abutting the Utah County/Salt Lake County line. In 1878, Turner conveyed the Property to the County by warranty deed, which the County immediately recorded in Salt Lake County. In 1998, approximately 120 years later, the County recorded its warranty deed in Utah County.

¶ 6 Nine years before the County recorded its warranty deed in Utah County, Metro West's predecessor-in-interest, Lamona Farms, approached the purported owners of the Property, Darhl and Roena Tingey ("the Tingeys"), and inquired as to the purchase price. The Tingeys represented to Lamona Farms's owners that the Tingey family had been in possession of and had used the Property since the turn of the century. The Tingeys would only agree to convey the Property, however, by quitclaim deed. The Tingeys explained that they were unable to convey the Property by warranty deed due to a 1,000-foot discrepancy in the Property description. This discrepancy, the Tingeys claimed, was created when the state of Utah began staking its section markers at both the north and south ends of the state. The Utah County Recorder's Office confirmed this discrepancy.

¶ 7 Before purchasing the Property, one of Lamona Farms's owners and a title company both reviewed the records at the Utah County Recorder's Office and determined that nothing in the records conflicted with the Tingeys' ownership representations. It is undisputed, however, that the Utah County Recorder's Office never listed the Tingeys as owners of the Property, and that the Tingeys were strangers to the record title.

¶ 8 The Tingeys conveyed the Property to Lamona Farms by quitclaim deed on April 14, 1989, for $25,000. Lamona Farms promptly recorded its quitclaim deed in Utah County. In 1991, Lamona Farms transferred the Property to Monterra Rock Products, Inc., which merged two years later into Metro West.²

PROCEDURAL HISTORY

¶ 9 In February 1999, the County filed an action to quiet title to the Property. Metro West filed a motion for summary judgment, arguing that it possessed legal ownership of the Property because (1) it was a bona fide purchaser under Utah's Recording Statute, see Utah Code Ann. § 57-3-103 (2000); (2) it had adversely possessed the Property under Utah's Adverse Possession Statute, see Utah Code Ann. §§ 78-12-7 to -13 (1996); and (3) principles of equity and public policy supported its ownership entitlement. The trial court granted Metro West's motion based upon Utah Code section 57-3-103 and the "undisputed facts that [Metro West] purchased [the Property] for valuable consideration and in good faith, and recorded its deed in Utah County prior to any recording there by [the County]." The County appealed.

¶ 10 The court of appeals affirmed the trial court's decision. Salt Lake County v. Metro West Ready Mix, Inc., 2002 UT App 257, 53 P.3d 499. In so doing, the court of appeals announced an "apparent title rule," under which a purchaser is entitled to bona fide purchaser protection where the records are silent with respect to ownership "if the grantor had apparent legal title, even if he or she did not have perfect legal title." Id. at ¶ 11. Apparent title, according to the court of appeals, is determined by considering "(1) whether the purported owner claimed to own the property; (2) whether the purported owner possessed the property; and (3) whether there was any activity or indication on the property that would raise questions as to who owned the property." Id. at ¶ 13. Under this apparent title doctrine, the court of appeals reasoned that the trial court was correct in extending bona fide purchaser protection to Metro West because the records were silent as to the Tingeys' ownership; the Tingeys had asserted that they had owned the Property since the turn of the century; the Tingeys were in possession of the Property; and the County did not have any signs or carry out any activity on the Property that would lead Metro West to believe that the Tingeys were not the legal owners of the Property. Id. at ¶¶ 15-16. The County petitioned for certiorari review of the court of appeals' decision, which we granted pursuant to Utah Code section 78-2-2(5) (2002).

STANDARD OF REVIEW

¶ 11 "When exercising our certiorari jurisdiction, we review the decision of the court of appeals, not of the trial court." Mitchell v. Christensen, 2001 UT 80, ¶ 8, 31 P.3d 572 (internal quotations omitted). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Utah R. Civ. P. 56(c). "[B]ecause a summary judgment presents questions of law, we accord no particular deference to the court of appeals' ruling" and review it for correctness. Mitchell, 2001 UT 80 at ¶ 8, 31 P.3d 572 (citing Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1385 (Utah 1989)).

ANALYSIS

I. UTAH'S RECORDING STATUTE

¶ 12 The County argues that the court of appeals erred in holding that a purchaser is protected under Utah's Recording Statute when he is on notice that his grantor has no record title to the property conveyed. We agree.

¶ 13 Utah's Recording Statute provides as follows:

Each document not recorded as provided in this title is void as against any subsequent purchaser of the same real property, or any portion of it, if:

(1) the subsequent purchaser purchased the property in good faith and for a valuable consideration; and

(2) the subsequent purchaser's document is first duly recorded.

Utah Code Ann. § 54-3-103 (2000).³ To be in good faith, a subsequent purchaser must take the property without notice of a prior, unrecorded interest in the property. See Ault v. Holden, 2002 UT 33, ¶ 31, 44 P.3d 781

. In addition, to be in good faith a subsequent purchaser must also take the property "without notice of any infirmity in his grantor's title." Pender v. Bird, 119 Utah 91, 96, 224 P.2d 1057, 1059 (1950); see also Paldevco Ltd. P'ship v. City of Auburn Hills, No. 202134, 1998 WL 1988569, *2, 1998 Mich.App. LEXIS 626, at *5 (Mich.Ct.App. Dec. 18, 1998) (unpublished per curiam decision) (noting "[a] good-faith purchaser is one who purchases without notice of a defect in the vendor's title" and that "[n]otice need only be of the possibility of the rights of another, not positive knowledge of those rights"). This notice is not confined to situations in which a subsequent purchaser has actual notice of an unrecorded interest or infirmity in the grantor's title. Rather, it includes circumstances where a purchaser has constructive notice of such information, including both (1) record notice "`which results from a record or which is imputed by the recording statutes,'" and (2) inquiry notice "`which is presumed because of the fact that a person has knowledge of certain facts which should impart to him, or lead him to, knowledge of the ultimate fact.'" First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966 P.2d 834, 837 (Utah 1998) (quoting 66 C.J.S. Notice § 6 (1950)).

¶ 14 The County argues that because a search of the Utah County records revealed that the Tingeys had no record title to the Property, Metro West was necessarily on inquiry notice of a defect in the Tingeys' title. According to the County, under this inquiry notice analysis the lack of record title would have led a reasonable person to have discovered the County's recorded title to the Property in the Salt Lake County Recorder's Office. Consequently, the County asserts that Metro West cannot be a good faith purchaser without notice under the recording statute.

¶ 15 We agree that the Tingeys' lack of record title put Metro West on notice of a defect in the Tingeys' title. However, we do so not because Metro West was on inquiry notice of the defect, but because Metro West had both actual and constructive record notice of the defect, which precluded it from taking the Property in good faith.

¶ 16 Because the Tingeys had no record title to the Property when they transferred it to Metro West, the conveyance was carried out through what is commonly referred...